Correlation Between Grupo Aval and Tanger Factory
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and Tanger Factory at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Grupo Aval and Tanger Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval Acciones and Tanger Factory Outlet, you can compare the effects of market volatilities on Grupo Aval and Tanger Factory and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Grupo Aval with a short position of Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and Tanger Factory.
Diversification Opportunities for Grupo Aval and Tanger Factory
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grupo and Tanger is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones and Tanger Factory Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanger Factory Outlet and Grupo Aval is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Grupo Aval Acciones are associated (or correlated) with Tanger Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanger Factory Outlet has no effect on the direction of Grupo Aval i.e., Grupo Aval and Tanger Factory go up and down completely randomly.
Pair Corralation between Grupo Aval and Tanger Factory
Assuming the 90 days trading horizon Grupo Aval Acciones is expected to under-perform the Tanger Factory. In addition to that, Grupo Aval is 1.12 times more volatile than Tanger Factory Outlet. It trades about -0.03 of its total potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.18 per unit of volatility. If you would invest 2,469 in Tanger Factory Outlet on September 1, 2024 and sell it today you would earn a total of 1,014 from holding Tanger Factory Outlet or generate 41.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval Acciones vs. Tanger Factory Outlet
Performance |
| Timeline |
| Grupo Aval Acciones |
| Tanger Factory Outlet |
Grupo Aval and Tanger Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and Tanger Factory
The main advantage of trading using opposite Grupo Aval and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, Tanger Factory can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tanger Factory will offset losses from the drop in Tanger Factory's long position.| Grupo Aval vs. Nucletron Electronic Aktiengesellschaft | Grupo Aval vs. UET United Electronic | Grupo Aval vs. Arrow Electronics | Grupo Aval vs. Renesas Electronics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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